Law of Property Act Receivership (LPA)

A LPA Receiver is appointed by the holder of fixed charged property (i.e. the commercial lender) with a view of selling the charged property or collecting the rental income from it, to pay the debt to the charge holder. At Oury Clark, our Insolvency & Restructuring professionals have acted as LPA Receivers for a number of Lenders, assisting them secure and dispose of property.

The process of a LPA is broadly as follows:

• Appointment – the power to appoint is contained in the loan documentation and clearly arises when the borrower is in default of those terms. The proposed Receiver will work with the lender to ensure a valid appointment is completed.
• Once Appointed – the Receiver notifies the borrower.
• Day One Activities – the Receiver arranges for the property to be insured and also carries out an initial inspection to review the condition of the property and ensure it is secure.
• Marketing and sale – often, property agents are instructed to prepare a valuation report and advise on the appropriate disposal method. Normally this will be either by private treaty sale or auction.
• Reporting to lender – the Receiver agrees a reporting timeframe with the lender to update them on their progress.
• Tax and completion – the LPA Receivers act as agents of the debtor. This means that any transaction may give rise to a capital gain will need to be reported to the debtor so they can include this in their individual tax return.
• Once the property is sold – the Receivers role is concluded.